On October 11, 2019, in Znojmo-Přímětice, Czech Republic, Reifenhauser Reicofil announced to the world that it witnessed the first spinning beams and extruded filaments from its latest generation RF5 technology, put into operation by PFNonwovens. This important technological advancement would drive productivity growth for the largest nonwovens segment. The key question facing the market was who could harness the capital necessary to make the leap. Two months later, in Wuhan, China, when the world’s first reported case of Covid-19 hit the newswires, the global nonwovens industry entered a new era characterized by massive upheaval and change – and a whole new set of strategic questions. 
 
Fears that the deadly virus would be highly transmissible via surfaces and airborne droplets drove a sudden surge in demand for all types of nonwovens: from wipes, to masks, to air filtration media. China led the surge in investment to add new capacity to meet this global spike in demand, while other developed economies did the same, not lagging far behind. Not anticipated was the relatively short duration of the deadliest phase of the pandemic, nor the supply chain disruptions, inflation, wars, and trade tensions that have stifled market growth. The post-Covid “new normal” is characterized by overcapacity on a global scale causing shrinking profit margins for nonwoven suppliers in the largest commoditized markets.
 
Faced with these persistent new challenges, nonwovens producers must consider proactive ways to restructure and improve market positioning: synergistic partnerships, internal and external means of consolidation, geographic expansion, and market diversification.
 
Consolidation may be achieved internally by retiring capacity, externally via mergers or acquisitions. Mitsui’s merger in February 2023 with Asahi Kasei provides a test case of how geographically overlapping or adjacent producers might better serve an oversupplied market by combining assets. Market diversification strategies should seize on opportunities to differentiate and specialize to protect against commoditization. Last month’s Berry-Glatfelter merger suggests how merging the capabilities of different nonwovens technologies can provide a diverse range of solutions to meet the demands of not only leading consumer product categories but also applications where a premium is earned on sustainability and/or specific blends of fibers. Geographic expansion that extends a company’s expertise into developing markets, such as TWE Group’s TWE-OBT joint venture with Obeetee Textiles in India, provides another pathway to growth.
 
We believe similar opportunities abound for strategic restructuring, consolidation, and diversification to better position forward-looking nonwovens producers around the world for future success.